Data Heavy Week Could Spur Volatility

by on April 1, 2013 | ETFs Mentioned:

U.S. equity indexes extended their gains last week as Cyprus bailout woes took a backseat and buying pressures returned on Friday after a brief profit taking period. With the S&P 500 now sitting on 5-year highs, bears are once again lurking and will surely look to take profits at the first sign of pessimistic news from any corner of the globe. The week ahead is stacked with major economic reports that are sure to add fundamental fuel to the tense tug-of-war between the bulls and bears on Wall Street [see also How To Swing Trade ETFs].

Weekly Outlook

Below, we highlight ETFs that may see an increase in trading activity as relevant market data is released and evaluated by investors:

  • IQ Australia Small Cap ETF (KROO, C): Australian equity markets will likely take cues from the central bank rate decision slated to take place later today. As a result, KROO could gap in either direction depending on how investors react to the overnight Reserve Bank of Australia rate decision; analysts are expecting for the rate to remain unchanged at 3%, although outlook commentary could still surprise markets.
  • NASDAQ Global Auto Index Fund (CARZ, B-): This ETF could be in for a volatile day after March motor vehicles sales data hits the street tomorrow morning. Analysts are expecting for this figure to come n at 15.3 million, marking a slight dip from last month’s reading of 15.4 million.
  • MSCI Japan Index Fund (EWJ, A): Japanese equities will come into the spotlight Thursday morning as investors react to the highly anticipated overnight Bank of Japan interest rate decision. Analysts are expecting for the rate to remain unchanged at 0.10%, although commentary on quantitative easing can easily spark volatile trading.
  • FTSE Europe ETF (VGK, A): European equity markets may also be in for a wild Thursday as the European Central Bank rate decision takes place a few hours prior to Wall Street’s opening bell. Analysts are expecting for policymakers to hold the rate steady at 0.75%, although economic commentary after the decision itself could sway markets in either direction.

Not much has changed on Wall Street over the past few weeks from a fundamental perspective; better-than-expected economic releases continue to bolster investors’ confidence while equity indexes remain on an upward trajectory with short-lived pullbacks. Likewise, key technical levels for the S&P 500 Index remain unchanged as well with support coming in at around 1,525 along with resistance near the 1,570 mark.

Below, we have highlighted three trading ideas for the upcoming week. Note that most of these recommendations require active management as they are only relevant for a very short period of time. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

Actionable ETF Idea #1: Long GLD

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Disclosure: No positions at time of writing.